M&A Activity to Ramp Up in the Chemicals Space as Companies Look to Accretively Benefit Equity Shareholders; Healthy Balance Sheets, Free Cash Flow and Unprecedented Cheap Financing Point to Increased M&A

Wall Street Transcript

67 WALL STREET, New York - July 24, 2013 - The Wall Street Transcript has just published its Agricultural & Specialty Chemicals Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Crop Yield Management - U.S. Corn Crop - Chemicals Companies Pricing Power - Fertilizers, Paints and Coatings, and Petrochemicals - Emerging Market Demand - Specialty Chemicals and Fertilizer Pricing Power

Companies include: Avery Dennison Corporation (AVY), Monsanto Co. (MON), W.R. Grace & Co. (GRA), Hexcel Corp. (HXL), American Vanguard Corp. (AVD), Polypore International Inc. (PPO), OM Group Inc. (OMG), Albemarle Corp. (ALB) and many more.

In the following excerpt from the Agricultural & Specialty Chemicals Report, an expert analyst discusses the outlook for the sector for investors:

TWST: What is the level of investor interest in specialty chemicals at the moment, and do you think investors are correctly assessing the opportunities for investment in this sector?

Mr. Kapsch: The specialty chemical industry remains highly fragmented and eclectic in nature, and therefore investment themes are very company and stock-specific.

Currently, there is a disparity across the valuation spectrum across the group, with investors gravitating to those names whose end markets have sustainable demand characteristics or that exhibit fundamentals with sustainable demand characteristics, such as aerospace or those that are exposed to end markets where there's increasing evidence of a positive inflection off of cyclical troughs, such as construction and automotive. So it seems like investors are gravitating toward those names the most, which I think is probably prudent at this juncture.

However, this inclination has left a lot of other names, many with other positive investment merits, behind in terms of valuation metrics, thus somewhat out of favor. So there are longer-term investment opportunities in the companies that have less near-term visibility with respect to their end market profiles at this point in the economic cycle.

TWST: What is your outlook for M&A in the specialty chemicals sector over in the short- to midterm?

Mr. Kapsch: Reflecting on the fragmented nature of the space, and given that corporate balance sheets are generally healthy, companies' free cash flow is relatively strong, and considering the unprecedented cheap financing right now, companies should be inclined to engage in M&A activity as a way of accretively benefiting equity shareholders. So I think there's a good chance of increasing activity in the chemicals space, particularly if boards have any confidence that economic recovery looking...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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